US Stocks Close Higher On Strong Financials

GeoffreyRogow

(Updates with additional company information beginning in the 10th paragraph.)

NEW YORK (MarketWatch) -- Comments from Federal Reserve officials about maintaining low interest rates and some reassuring earnings news out of the housing sector gave lift to Bank of America, Home Depot and the broader market Wednesday, though a pullback for Macy's weighed on some consumer stocks.

Finishing higher for a sixth-straight day on Wednesday, the Dow Jones Industrial Average closed up 44.29 points, or 0.43%, to 10291.26, marking its highest close since Oct. 3, 2008. Among its leading components, Bank of America rose 40 cents, or 2.5%, to $16.43, while Home Depot gained 49 cents, or 1.8%, to 27.31.

Helping financials, Federal Reserve Bank of Dallas President Richard Fisher said he is aware that the Fed's current stance of keeping interest rates low for an "extended period" was denting the dollar but that he didn't want to do anything about it, pointing out inflation is likely to remain subdued for some time. Traders interpreted the comments as a signal interest rates will remain low, which in turn would help banks and down the line, possibly even the housing market.

Further helping housing stocks and providing lift to Home Depot, luxury-home developer Toll Brothers said that inked contracts for its fiscal fourth quarter surged 42% from a year earlier, with a 62% increase in dollar terms. Toll added 3.02, or 16%, to 21.41.

More broadly, stock investors continued to keep a close eye on the dollar as traders juggle between safe-haven assets, such as the dollar, against more risky assets, such as stocks. In a volatile session for the U.S. currency, the dollar closed about where it started with bearish sentiment about the currency still in place and helping equities.

"I find the decline in the dollar may be a constructive one and save our export industry and export stocks," said Stephen Lieber, chief investment officer for the Alpine Dynamic Balance Fund. "It keeps us from buying cheap merchandise from abroad."

Weighing against the market's gains, Macy's slid 1.57, or 8.1%, to 17.86, after its fiscal third-quarter loss narrowed more than expected, though the department-store operator's boosted full-year guidance failed to meet analysts' views. Other retailers including J.C. Penney, off 1.28, or 4.1%, to 29.87, and Kohl's, down 1.77, or 3.1%, to 54.59, were hurt by the Macy's report.

Also helping financials, Dutch financial services company ING, on the verge of a planned split-up mandated by the European Union in return for receiving state aid, swung to a third-quarter profit, helped by improving investment markets. ING closed up 79 cents, or 5.5%, to 15.29.

In addition, financial-services company Prudential Financial rose 1.28, or 2.7%, to 48.76, as it declared a 2009 common-stock dividend of 70 cents, about 21% higher than the 2008 dividend.

On the other hand, American International Group fell 84 cents, or 2.2%, to 36.75, after Robert Benmosche told the board of AIG he is considering stepping down as chief executive of the government-controlled insurer, just three months after taking the job, people familiar with the matter told The Wall Street Journal.

Cliffs Natural Resources restored its quarterly dividend to a level last seen six months ago, with the mining company citing an improved outlook. Cliffs Natural closed up 1.10, or 2.9%, at 38.96.

On the earnings front, Weight Watchers International lost 98 cents, or 3.6%, to 26.51, as it reported a 0.2% dip in third-quarter earnings on falling sales. Still, the provider of weight-loss services again backed its 2009 profit target.

Bakery company Flowers Foods' third-quarter earnings rose 16% on increased promotions in its bakery segment, though the company lowered the high end of its 2009 adjusted earnings forecast. Shares fell 1.41, or 5.9%, to 22.45.

Priceline.com (Nasdaq) fell 7.42, or 3.6%, to 196.80, a day after soaring 18% as Credit Suisse cut the stock to neutral, saying the online travel booking company has a compelling multi-year growth story, but that there's lowered visibility.

Adobe (Nasdaq) lost 68 cents, or 1.9%, to 35.92, after unveiling a 9% headcount reduction. Oppenheimer downgraded Abode to perform from market perform as the shares approached the firm's $38 price target. Oppenheimer said the worst is "likely behind" the software company, but the analysts "feel the environment remains more challenging than most investors are modeling."

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